Crypto theft in 2021 highest in 10 years; over $12B lost in security breaches, frauds

2021 was a record year for crypto attacks, as not only the number of incidents, including breaches and fraud, but also the amount stolen in cryptocurrency was the highest in the last decade, indicating a parallel growth in crypto crime with the global crypto market. In 76 such incidents, $ 4.25 billion worth of crypto was stolen in 2021, the highest during the period 2011-21, according to a report by crypto transaction monitoring and analysis platform Crystal Blockchain. Overall, 226 incidents involving 120 security attacks, 73 decentralized finance protocol (DeFI) exploits, and 33 fraudulent schemes were reported during that period with a total of around $ 12.1 billion in stolen crypto.

The second highest loss in cryptocurrencies was recorded in 2019 when $ 3.5 billion was withdrawn in 26 different incidents. In 2020, this was reduced to $ 1.49 billion in 31 incidents. The most popular method of crypto theft was infiltration of crypto exchange security systems. "The most notable type of attack is security breaches in the internal security systems of a cryptocurrency entity, by which illegal access to active wallets belonging to the crypto service is gained," the report noted. In 2018, the Japanese crypto exchange Coincheck had reported around 523 million of its NEM coins worth more than $ 500 million stolen in a security breach. In August this year, hackers stole more than $ 600 million worth of Ethereum and other cryptocurrencies, reportedly from the Poly Network, which is a cross-chain DeFi platform that allows users to transfer currencies across different blockchains. . However, the hackers returned the full amount later.

Most of the $ 12.1 billion stolen between January 2011 and December 2021 was $ 7.12 billion stolen through scams, followed by $ 3.18 billion withdrawn through security breaches and $ 1.76 billion via DeFi hacks. "DeFi hacks will continue to increase, as the DeFi industry continues to build better security systems and hackers continue to go to great lengths to break these systems," said Crystal Blockchain.

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As for the regions with the highest number of incidents, the US topped the list. Since the beginning of the existence of blockchain, US-based crypto services have been attacked 13 times. However, in terms of value, China witnessed the biggest crypto attacks. This was mainly due to the 2019 PlusToken Ponzi scheme that accounted for $ 2.9 billion and the related WoToken scam last year that received crypto worth around $ 1 billion. Besides the US and China, the other most common locations for exchange security breaches were the UK, South Korea, and Japan.

“While it is challenging to completely prevent breaches of security systems, particularly in relation to active wallets, exchanges may have adequate insurance for special cases, an in-house security team, blockchain analytics software, and Backup reserves that are equivalent to the amount of cryptocurrencies stored in online storage, ”the company added.

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